This episode of Tax Tuesday, Toby Mathis, Esq., and Eliot Thomas, Esq., cover topics including paying your children from your business, when you can write off meals as “business” – (hint: it all comes down to ‘intent’), and how often you should meet with your CPA. Submit your tax question to taxtuesday@andersonadvisors.

Highlights/Topics:

• “Does my S-corporation where I am the sole owner and sole employee have to issue a 1099 to me as an individual?” – In general, you’re S-corporation, you’re an employee, so you would get a W-2. It’s what we call reasonable income.
• “If my husband and I, both shareholders of our C-corp, discuss business over dinner, are we able to be reimbursed for our meals? Is there a list of reimbursable expenses for employees/owners of C-corps that is easier to read than the tax code?” – If the intent was to talk about business, then generally speaking, you can deduct it
• “Can I sell my solo 401(k) held property, do a 1031 into another investment, and then buy the property back with an LLC?” – first of all, we wouldn’t have a 1031 going on with a solo 401(k). We don’t have deductions, we just have cash in cash out with our retirement plans.
• “How are taxes handled differently with capital assets versus repairs, maintenance, and labor of rental properties?” – Every time you lay out cash for one of these repairs or labor, that’s going to be an immediate deduction for the full amount.
• “How do I get tax benefits from paying my children for doing work in the business?” – basically you can just pay them out whatever entity you have.
• “Are the costs of education specifically related to starting a business deductible, specifically paid webinars or courses taken online. I’ve read that they are, but apparently many say they are not. Is there some special way to categorize them so that they are deductible?” – If its in a C-corporation or an LLC taxed as a C-corp, we’re allowed to deduct the training as training our employees, which you would be an employee of.
• “I recently purchased a small camper trailer to rent out, my camper rental side hustle per se. “Does this type of rental count as an STR, short term rental, as far as taxes are concerned? Some suggest filing Schedule C while others say Schedule E might be more appropriate. We are not going to use this camper personally. It is for rentals.” – If you rent it for 14 days or less, you don’t have to report it. It’s covered under 280A subsection G2. If you rent it for more than 14 days, it is an investment property.
• “If I put my rental properties into an LLC, do I have to file both personal taxes and business taxes?” – how is that LLC taxed? It can be a sole proprietorship. It can be a partnership if we had another member, two or more members. It could be an S-corp, could be a C-corp. All those make a difference.
• “How often should I be meeting with my CPA a year?” – I’m going to really recommend having quarterly meetings with your CPA just to make sure everything’s on track.
• “Can I file my taxes for my LLC as a corporation to get a lower tax percentage? I run short term rentals. I host short term rentals for other owners. I also run short term rentals in the properties I own. I have an S-corp with my husband and I work from home. My accountant said, I cannot deduct my home office expens – we never want to put appreciable real estate into a corporation, S or C, if we’re holding onto it for a long time.
• “Can someone file their taxes through your company?” – Yes, you can. You have to be a tax client

Resources:

Request a Free Cost Segregation Study

Tax and Asset Protection Events

Toby Mathis YouTube

Toby Mathis TikTok

Clint Coons YouTube

Full Episode Transcript:

Toby:  Hey, guys. Toby Mathis here. You’re in Tax Tuesday, where we are bringing tax knowledge to the masses. I’m Toby Mathis, one of your hosts.

Eliot: I’m Eliot Thomas.

Toby: Also one of your hosts. Eliot and I are both tax attorneys, I guess. Is that true?

Eliot: Yeah, we’re attorneys. We do tax.

Toby: Usually we have some CPAs rolling around. We’ve got a whole bunch, actually in the panelist area. Gosh, bless it. I had to go through this list, guys, because this is insane. We have Matthew, Patty, Amanda, tax attorney, Dutch, CPA, Jared, CPA, Jeff, CPA, Russ, CPA, Tanya, CPA, and Troy, my gosh, the head of the bookkeeping department. We have a whole bunch of folks there to answer your questions.

If this is the first time you’ve been to a Tax Tuesday, give me a reaction. Give me a thumbs up. Give me something so I know it’s your first time. Put it into chat. Put it into anything. There they are. Look at that.

If this is your first time, here’s the cool thing about Tax Tuesday. We don’t charge for anything and we’ll answer your questions. If you have questions, as long as you’re not saying, how do I fill out this form, or here’s my 1040, will you complete it for me, we’re pretty good.

If you start getting into the weeds where we’re advising you, then we’re going to say, hey, you need to come in and at least be a platinum client. It’s not very expensive. It’s less than a hundred bucks a month. And you could ask all the tax questions. You wanted the CPAs and all the questions you want of our attorneys. For this, it is free. Why do we do it? Because we’re insane. Actually, speaking of insane, can I do the Howard Dean?

Eliot: You can.

Toby: That’s how insane it is. I have new buttons. They should never give me new buttons, but they did. I’ll be using them.

Eliot: Judiciously.

Toby: Yeah. I don’t think I’ll go too crazy, but some of you guys remember Howard Dean doing that. It’s timely.

Eliot: Classic. Year of election.

Toby: People blowing up their presidential campaign. That’s a nice run one day. Anyway, we’re going to be going over taxes and how you can save on them and learn about them. Really simple, anything’s on the table. If you have questions that you need to answer, we privately answer them in the Q&A. Even in chat, you can make comments, but we will probably ask you, please move over to the Q&A because we get so many questions.

We get hundreds of questions every week that we answer. We do it for free. Why? Again, because we think it’s really important that people actually have an understanding of the tax code, and this is our little bit to help. Share it with anybody that you know. This is our 212th episode of Tax Tuesday, and we’re not planning on stopping any time.

Last time, Ronnie was here. He was rolling around, one of our CPAs that ventured off and did his own firm. He’s a great guy. Almost sucked him in here, but he did them when we first started. So many people have worked on these, and we just have a bunch of really great people. It’s a whole bunch of fun. We’re going to do that now.

If you have questions in the ensuing weeks between episodes since we do these every other week, you can send email questions into taxtuesday@andersonadvisors. If you do that, we pick some of those and we answer them in the main event today. We’re going to go over what those questions are that people have emailed in. We grab 10-15, and we answer them live as well.

Again, this should be fast, fun, and educational. We are a little bit cheeky, and that’s because we don’t want taxes to be dry, nor do we want them to be fear like fear mongering. There’s enough anxiety out there. We don’t need to do that with taxes. Your chances of getting audited when you do things right are very, very low.

If you did get audited, you’re not going to mind it. Nowadays, it’s mostly correspondents anyway if you’re following the tax law. We’re going to make sure that you know what that law is so that you can actually do so rather than guessing. So come along for the ride. Speaking of the ride, here are our opening questions. We’re going to answer these as we go along.

“Does my S-corporation where I am the sole owner and sole employee have to issue a 1099 to me as an individual?” We’ll answer that.

“If my husband and I, both shareholders of our C-corp, discuss business over dinner, are we able to be reimbursed for our meals? Is there a list of reimbursable expenses for employees/owners of C-corps that is easier to read than the tax code?” Wait, you don’t want to read” Actually, the tax code is only 162, and then it’s the thousands of pages of regulations that you get to go through. We’ll condense that down for you.

“Can I sell my solo 401(k) held property, do a 1031 into another investment, and then buy the property back with an LLC?” I love your creativity. Love it. By the way, on that previous question about getting you guys, we’ll get you a list of it. Is that a good thing? Give me a thumbs up if you would like a list of the deductions. Do you have a list of the deductions?

Eliot: We do.

Toby: Where?

Eliot: I gave it to Patty, so I’ll put it on her.

Toby: Patty, where is it? Okay, we’ll share that out when it comes time. You guys actually want to know what you can write off? That’s a shocker. Yeah, we’ll share it out when it comes time. That’s worth Ric Flair. That just gave me chills, Rick. Did I just miss this one?

All right. “How are taxes handled differently with capital assets versus repairs, maintenance, and labor of rental properties?” I didn’t know that rental properties went into labor. Apparently they do.

Eliot: They can.

Toby: Yeah, I’m just teasing. “How do I get tax benefits from paying my children for doing work in the business?” I got at least one tier crying.

All right. “Are the costs of education specifically related to starting a business deductible, specifically paid webinars or courses taken online. I’ve read that they are, but apparently many say they are not. There’s a Woody case that actually gives us the line. Is there some special way to categorize them so that they are deductible?” We’ll go over that. It’ll be fun.

All right. “I recently purchased a small camper trailer to rent out, my camper rental side hustle per se.” I like that. I’d pick one. My camper side hustle, that’s what I’d call it.

“Does this type of rental count as an STR, short term rental, as far as taxes are concerned? Some suggest filing Schedule C while others say Schedule E might be more appropriate. We are not going to use this camper personally. It is for rentals.” It’s a good question. We’ll answer that.

“If I put my rental properties into an LLC, do I have to file both personal taxes and business taxes?” Good question. We will answer that.

“How often should I be meeting with my CPA a year?” That’s a good question, and we’ll make sure that we give you some good guidelines.

“Can I file my taxes for my LLC as a corporation to get a lower tax percentage? I run short term rentals. I host short term rentals for other owners. I also run short term rentals in the properties I own. I have an S-corp with my husband and I work from home. My accountant said, I cannot deduct my home office expenses.” Boo to your accountant. “I know I can, but I don’t know how.” You’re in our world, this is perfect.  “Could you please explain the steps to do it?” Of course we will. “Can someone file their taxes through your company?” We’ll answer all of those.

This is great. You see how it works. We read questions and then we leave you hanging. No, we’re going to answer them all. Don’t worry. Speaking of leaving you hanging, if you’re looking for answers to your tax questions, we are sitting here at over 768 videos that you could go watch on various topics that are on our YouTube page, my YouTube page. You can go there, just Google Toby Mathis, or Patty may share out a link for my YouTube channel.

Yes. Look at that, aba.link/youtube. It’s free. Subscribe and click the little bell and you’ll be notified. We have been putting out lots of videos of recent, because there’s a lot going on. There’ll be a continued amount because it’s an election year, which is usually a good thing for taxes.

Everybody’s going to try to bribe you. Yeah, I’ll give you this for your vote, give you this for your vote. There’s actually some stuff that’s really important, and we try to put stuff out there. I just did a deep dive into the housing market. I do believe we are completely under built in this country. I use the facts, and everybody can draw their own conclusions when you look at facts, They’re fickle things. They don’t really care about our feelings. They just are what they are, so we try to do that.

By the way, we also do something called the Tax and Asset Protection Workshop. I do this with my partner, Clint Coons, sometimes Brent Nagy. We’ve been having a new guest who’s been a client forever. Worked with Rich Dad, Poor Dad for a lot of years, was a disciple of Robert Kiyosaki, comes in and teaches. I think we got Clint coming up this weekend, and we do these just almost every week. It seems like we’re doing them every week.

My wife says we’re doing them every week. She’s like, what are you doing Saturday? Teaching in course. Of course. They’re really great. If you want to learn how to use land trusts, LLCs, corporations, and protect your assets, take that bullseye off, if you want to learn how taxes work for real estate and a bunch of strategies, come on aboard. It’s free.

It’s a full day. You’re going to be there 9:00-4:00 Pacific standard time. Then we have a live version, four days. Looks like it’s going to be March 21st, 22nd, 23rd, and 24th in Orlando. It’s one of our live tax and asset protection workshops. Please come join us. They’re extremely economical for four days of getting to hang out.

The fun part is we actually get to hang out. It’s nice to see people nowadays. We went through years where we could travel around and see people. Now we’re able to get together and see people. The cool part is you’re around a bunch of investors. All of them, business owners and real estate investors. If that’s the waters in which you want to swim, we will help you, but even more importantly, you’ll be surrounded by people who are just like you who will help you as well. Anyway, there’s that link.

By the way, if you like Mr. Coons, he also has a YouTube channel. Just Google. Clint Coons YouTube and you’re going to find his channel, or we can put up a link to his channel as well. He does a great job on the asset protection components.

Clint’s always been more on the asset protection side. I’ve always lived more on the estate planning and tax side. Together, we make a pretty good team. Anyway, you go do that. Let’s get to the questions. Eliot, you’re talking too much. Let’s get to it.

“How does my S-corporation where I’m the sole owner and sole employee have to issue a 1099 to me as an individual?”

Eliot: A lot of different ways you can look at this question. In general, you’re S-corporation, you’re an employee, so you would get a W-2. It’s what we call reasonable income. It’s an S-corporation, it files its own return on form 1120-S as in Sam, and that would give what’s called a K-1. All of that comes on to your personal 1040. It does file its own return, but it doesn’t get taxed as a general matter.

If there was a situation where your S-corporation paid you as maybe some kind of a consultant or something like that outside of your normal duties, and it was over $600, then it probably wouldn’t need to issue a 1099. As a general matter, no, you would not have a 1099 involved with the owner in an S-corp.

Toby: Yeah. The only time you’d have a 1099 is if it was something beyond you being an employee. Otherwise, usually you’re picking one. I’m either a W-2 or I’m 1099. If you’re working for the S-corporation, it’s your S-corporation, you’re taking a W-2.

Let’s say that your S-corporation was a consulting business, and you had a catering business on the side, it might be okay to 1099 you and that if you didn’t have it as a structure, or if you had it as a disregarded LLC. Eliot, I think you nailed that one.

Eliot: We get this question occasionally, so that’s why I picked this one. It’s because I do see it every now and then. I think there gets be a little confusion on how that money all gets reported on your 1040, so good question.

Toby: Yeah. You’re going to be getting a W-2 and a K-1. That’s really what you’re going to get. You will not be getting a 1099, unless you have an unrelated business that’s doing business with that as a corporation, in which case then potentially you could be getting all three. It’s like the trifecta of tax forms, but I would say, don’t do that. All right. Good answers, good questions.

“If my husband and I, both shareholders of our C-corp, discuss business over dinner, are we able to be reimbursed for our meals? Is there a list available of reimbursable expenses for employees, owners of C-corps that is easier to read than the tax code??

Eliot: With Valentine’s day, I picked this one just because of the dinner. That’s got to be romantic. Let’s talk tax over dinner. Can you? The thing Toby’s always going to hit us with here at Anderson, what was the intent? Whenever we talk about deducting meals, what was your reason for going out to dinner?

If the intent was to talk about business, then generally speaking, you can deduct it, whether you did business or not. If you go out to dinner and then start talking business, that actually is not a tax deduction if you didn’t have the intent to do so. That’s one thing. Just always say you have the intent.

What I like to hold clients back a little bit on this or rein them in a little bit here is that they want to deduct every meal. We go out three times and all we do is talk business. We go to three dinners a week.

There’s going to be a reasonableness to it. It has to have a business topic, et cetera. So I would not try and deduct all my meals. What’s reasonable? That’s just going to depend on the facts and circumstances, but intent and reasonableness. We’ll leave that part. I don’t know if you want to address that.

Toby: Would you discuss work at your Valentine’s day meal?

Eliot: Being I’m single, I probably would. It’s probably why. Bad idea 101.

Toby: He would, yeah. Trying to help you here, my friend. You’re incorrigible. That’s even a bigger one. They’re sending you love. This is where they say, what’s the word they use in Texas, bless your heart. That’s what they say. Bless your heart. I know a few people. I don’t understand.

All right. There are two cases actually. There’s Sutter, where every day, I think it was a doctor, was taking out his employees to lunch. The IRS has the ability to say, hey, you can only deduct business meals to the extent that they’re greater than your personal meal. If you’re doing them every day, in other words, too much of a good thing. It’s the old rule that pigs get fat and hogs get slaughtered. Don’t be a hog, so don’t go every day.

If you have a business meal, yes, you can write it off if you meet the requirements. I would say there’s a heightened requirement if it’s spouses. You’re supposed to do the who, what, where, when, why. The receipt, if you guys are having a meal, covers a couple of those. What was the purpose of the business meal and what did you actually discuss?

If it’s a husband and wife, if you want to bomb proof this thing and make sure that there’s no way that they can attack you, is write just a quick summary. It can be really short and just say, this is what we discussed and here is why. You got to show a profit motive at that meal and that it’s only 50% deductible. They always say it’s a 50% deduction, because you would have eaten anyway. What they’re really trying to do is get you to write off the amount that is an excess of what you would have done if it had just been yourself.

Here where we have spouses, there are some cases where it’s hard and fast. If there’s no docs, you’re done. But if you could show, especially in this case with the C-corp, hey, I just track it, it’s an accountable plan, it doesn’t say you and your spouse went to dinner. It just says meals at 50%. If you have it every day, you’re probably going to run into trouble. If you do it periodically to have a weekly meeting, I think you’re fine. That’s the big one.

Do you have that sheet? Did you guys share a sheet? Patty, do you share a sheet of all the business deductions? You don’t necessarily have to do meeting minutes, but you can. Again, I always say, just take your phone out. Let’s see if it jammed in here somewhere, and just put it in your calendar. This is what we talked about, and you should be good. That’ll get you.

All right. Patty says, here you go. But I didn’t see what you attached. Everybody says, thanks. Maybe it’s already out there somewhere. There we go. There’s a link. All right. It’s not an extensive list. It’s a list that we use. When we do two-year tax reviews, we’re looking at the usual suspects, but anything that is ordinarily necessary to a business can be deducted with very few exceptions.

Eliot: You can avoid the tax code now.

Toby: Yes. Excuse me. Two cases. Sutter was the one where they said too many meals. The other one was Fletcher. It was the same situation, but here was an interesting one. In Fletcher, they denied the deductions that was just the husband and wife, because they had no backup, no documents, but they allowed every meal where they had a third party there. If in doubt, bring along a third party, and it seems to make you cross the line.

They didn’t have enough documentation to back up the purpose of that meal, the reason it was an expense, and what was the profit motive. They didn’t have enough for that for themselves, and they got denied those deductions. But they were allowed every single meal that they had with a third party.

Eliot: That’s great. Good stuff there.

Toby: Anyway, it’s just one of those weird little nuanced things. If you’re a tax nerd, you like that stuff. Some of you guys might like it.

“Can I sell my solo 401(k) held property to do a 1031 into another investment and then buy the property back with an LLC?” That is wild.

Eliot: Again, the creativity is definitely a 10. The reality here is first of all, we wouldn’t have a 1031 going on with a solo 401(k). We don’t have deductions, we just have cash in cash out with our retirement plans. If you were to sell it, you don’t actually have a gain in your solo 401(k). Money either went up or it went down. We don’t look at it in the context of gain.

That’s what a 1031 is all about is deferral of a gain. We wouldn’t do a 1031 to begin with. Let’s just take that out of the equation. Could we sell it to a third party, even an unrelated party? You can certainly do that, but then could you buy it back? The IRS has thought about that, and they call that an indirect transaction. That’s really a prohibited transaction if one went in with that game plan, that mindset.

Toby: Is there a timeline?

Eliot: I don’t know of any specific timeline. Really, they would look to, can you prove that your intent wasn’t to try and do those strict rules?

Toby: Yeah, if you use a straw man. I think what you’re saying is, let’s say that we sell the solo 401(k). You wouldn’t do a 1031, you just sell it to a third party. That third party holds it and then sells it to—that sounds like a straw man transaction, so they’re going to say an indirect disqualified party.

I can’t see a way around that. You wouldn’t even have to worry. You got an exempt entity, not worried about the gain, the property’s in there. If you’re going to sell it, just sell it, and then there’s no gain inside that 401(k). If you wanted to get out of the 401(k), could you potentially contribute money and receive the property back? I don’t even know you could do that.

Eliot: I always thought you couldn’t. I think you can’t take it out.

Toby: I think it’s in there. What you can do is ask a plan administrator. We could always research it and just see if there are cases and under what circumstances. I’m not thinking there is, but maybe. You never know. If we dig deep enough, maybe we’ll be able to find a way if we know the specifics of your transaction. You should also just figure out how much gain you’re actually talking about.

Also, that solo 401(k), is it in the traditional buckets, or is it in the Roth bucket? Because you may not want to get it out. If it’s in the Roth bucket, you’re never going to pay tax on that. It might not be smart to try to get it out of there. If it’s traditional, it’s cooking in there. It’s not gonna pay any tax until you’re 73 or 74.

Eliot: Yeah, somewhere in that.

Toby: Yeah, 73 triggers. 74, you have to pay it. It’s a small amount, usually about 3% or 4% a year. Again, I don’t think I would be doing this transaction. Best advice we can give you is proceed cautiously.

Somebody says, can I actually partner with a 401(k)? Yes, you can partner with your own 401(k), but it’s a one time deal. It’s like, you’re both putting money into an LLC and you’re done. You can’t continue funding and continuing having more transactions. But yes, you can partner with a 401(k) or an IRA.

If you use leverage, then you want to make sure you do a 401(k), because they are not subject to something called unrelated debt financed income. They can have loans without having a tax consequence. If you have an IRA, they pay tax on the portion of income that is derived from leverage. If you’re doing this and depending on the type of property, again, just reach out to us. we’ll tell you the rule and make sure you’re not doing anything that hurts yourself. It’s the last thing we want.

“How are taxes handled differently with capital investment versus repairs, maintenance, and labor for rental properties?”

Eliot: A nice question here, because we’re looking at different ways things can be deducted on your return. Typically looking at the capital investment, I’m assuming we’re talking about capital assets. Usually your deduction there is going to be depreciation. You take a little bit over time.

That’s one way of distinguishing what we’d have on the repairs, maintenance, and labor. Those are all things that generally speaking, you’d be a cash basis taxpayer. Every time you lay out cash for one of these repairs or labor, that’s going to be an immediate deduction for the full amount. You don’t depreciate, you don’t take it over time. You recognize that expense immediately that tax year.

Toby: What are the different safe harbors?

Eliot: You mean the $2500? We have the $2500 de minimis safe harbor. That says that if you have repairs or something like that that are under $2500, we can go ahead and deduct the median.

Toby: Even improvements.

Eliot: Yes.

Toby: Even if it’s an improvement, if it’s under $2500, you can write it off. It’s deductible. It’s a safe harbor, so you don’t have to prove it. The other one is if you have financials that are done for anything other than taxes. If you have a mortgage and they want to see a P&L, that number is actually $5000. It can actually be jumped up there.

There are some other ones. If you have to replace it three times in 10 years, there are some other rules about whether you can depreciate it. The other thing is you can always cost seg a property and really accelerate the depreciation where you’re breaking that property into five, seven, 15-year property, plus the 27 or 39-year property. Depending on if it’s residential or non residential, you can get a pretty tasty deduction there between cost seging and then bonus depreciation.

Bonus depreciation, 60% this year, 80% last year, 100% previous bunch of years. It should go back up to 100%, because the house has already passed that and it’s at the Senate right now. Hopefully, they take action on it. If that’s the case, then 100% bonus depreciation on anything that’s five, seven, or15-year property.

In English, what that means is you can write off a huge amount of your improvements on that property as personal property. I think it’s 481 property. You can accelerate that all into one year. Even if you’ve owned the property, you can accelerate it, do a catch up provision, and take it. You could do some really cool stuff.

Eliot: Yeah. There’s a lot to do with the capital side, not just your straight line depreciation. Although that is, I would say, where people start, but a lot can be done with it.

Toby: Yes. Somebody said, I wish I’d known that in 2021. Well, you know it now.

Eliot: You still might be able to catch up.

Toby: Yeah, that was the one with the 2021. Let me just see. I’m going to scroll. It went bye-bye. I do hard money loans out of self-directed and to UBIT now because you’re not borrowing money, you’re doing lending. That’s just ordinary income. It’s 2011. They’re forced to sell, but I want to buy or invest again. Good for you. Get back on that horse. Get back out there. It’s a great time.

All right. “How do I get tax benefits from paying my children for doing work in the business?”

Eliot: All right. I’ll try and be real careful with this one, because it gets complex the way I describe it usually. First of all, basically you can just pay them out whatever entity you have. That would be part of the thought process. What business is paying them?

Let’s say you have a rental property,. If you pay them out of that one, probably you and or your spouse own that LLC that the rental property is in. If you did it there, then the child’s not subject if they’re under 16 or under, basically. They’re not subject to employment taxes, which is approximately for the few, I believe. For younger, then we don’t have to pay the employment taxes if it’s under $14,650…

Toby: Yeah, this year it’s up to $14,650. The really cool part is you still have to run through payroll. You’re doing the W-4.  You’re just saying no withholdings because you don’t plan on having a tax. You’re not withholding. There’s no FUTA, there’s no OADSI, which is social security or Medicare. There’s no withholding. You’re literally giving them all the money. You have to run it through payroll though.

If it’s, again, under $14,000, they pay zero tax on it and you deduct it. What does it mean to you as a parent? It means that you don’t have to pay a bunch of tax on spending that $14,000. Let’s say that it’s going to cover school, car, clothes, living expenses, and you’re basically saying, hey, I’m going to pay you through here, they actually have to do work. But I’m paying you this. If you spent $10,000 on average, you have to make $15,000.

According to the tax foundation, the average tax in this country is 29%. Just right about a third of it goes bye-bye. You’re looking at about close to a $5000 tax bill. You save that. In this theory, if you did it for $10,000, it would save you about $5000. It’s wild.

Everybody’s facts are a little different, but you get the idea. It could save you a substantial amount of money. It could save you a really nice vacation. Is there a minimum age? There are tax court cases going to nine, but the rule is if they can do any service for the company, including being used for modeling. The nine-year-old was given Screen Actors Guild’s rates for being the model on the marketing using them for brochures, websites, and things like that. You could pay them whatever you’d pay a third party. In that case, they use the Screen Actors Guild. It was a pretty high rate.

Eliot: Yeah. Again, this is if you’re paying them from an entity that’s disregarded or sole proprietorship owned by one of the parents or a partnership owned by the parents. It would be different if you’re paying through a C-corporation there. Whether you 1099 the child or you W-2 them via a W-4 form, you’re going to get hit with the employment taxes. We can’t get out of it that way.

Toby: It’s okay. You have to hit your 40 quarters.

Eliot: Yeah, exactly.

Toby: It’s still going to benefit them in some way.

Eliot: A workaround with that is we could lease the children from that LLC we’re talking about.

Toby: To mom or dad.

Eliot: Yup. Mom or dad who sets up an LLC, taxes a sole proprietor. It pays the child, zeros it out, you got to the same place as you wanted to without all the payroll tax. Somebody says, where do I put their money? You’re going to have a custodial account at the bank, and you might just put it in a Roth. I get them $14,000, or let’s just say it’s $10,000. Pay them $10,000, and they’re able to take that money. $7000 of it, I believe, they put right into a Roth, and the other portion maybe…

Eliot: College or whatever.

Toby: Yeah, probably. They’re just going to spend it, it’s tax free. Let’s just get it into the Roth. I’m trying to think if there’s any other accounts I’d put them in. If you’re running them through payroll, technically you could run it into a 401(k). We could absolutely double up on the tax benefit. The best one is the Roth cause you’ll never pay tax.

Let’s just think you have a 15-year-old. They’re going to retire in 50 years or whatever it is. Just think of how many times that money’s going to compound, even if you put it in the S&P, which averages over 10% in its history. If that’s all you did, you just sat it there, and just let it grow over 50 years, you’re talking about doubling every seven years. We’re talking about seven doublings.

Let’s just say you put in $7000,  goes to $14,000, goes to $28,000, goes to $56,000, goes to $112,000, goes to $200,000 something, and then $400,000 something. They’re going to be right around that million dollar mark which is great. That’s what we want.

I’m just going to follow up on this just so that we’re doing it at least. Sometimes people are saying, what about my sibling? What about my parents? What about a child that’s an adult? You run them through payroll, or they have their own business and you’re paying them that way. But yes, you can still employ relatives.

If you’re caring for a relative, let’s say you have a parent that you become their caregiver and they’re dependent, then you can cover them under things like your medical, your health reimbursement plan if it’s a C-corp. There are other ancillary benefits that come along versus you just doing things because you feel like it.

Eliot: A lot of good stuff.

Toby: Yeah, we want to get the benefit.

“Are costs of education specifically related to starting a business deductible, specifically paid webinars or courses taken online? I’ve read that they are, but apparently many say they’re not. Is there some way to categorize them so that they are deductible?”

Eliot: I picked this question, because you’re seeing one thing out there that says one thing, and you’re seeing another thing out there. In the next question, we have a bit of that going on. You can deduct education or training like that. There’s no question about that you can. But if it’s a new line of business, which we’re saying here in the question, starting a new business, I’m going to go with that assumption, then we may have to do it in a C-corporation or an LLC taxed as a C-corp. There, we’re allowed to deduct the training as training our employees, which you would be an employee of.

If it’s another type of business, and it is a new line of business such as an S-corporation, a sole proprietorship, or a partnership, you typically would not be able to deduct training for that first year like that.

Toby: You might be able to grab it as a startup expense, which means you’re going to be able to write up up to $5000, and then you’re amortizing the rest over 15 years. It just depends if it’s a new career.

Let’s say that you’re at Anderson and a lawyer starts taking tax courses, and they go get their CPA. We could write that off, because it’s part of our business and it helps them. But let’s say that you’re a typical lawyer at a litigation firm, and you start going and doing the CPA. It’s not part of your business. You’re literally learning a new skill that has nothing to do with that business. Then it’s not deductible.

Put it another way. When I went to college, I was in Seattle University, and Boeing would put its engineers through the MBA program there. I’m sitting in classes with these folks doing the business school. Boeing was writing that off. Boeing was covering that expense, because it was bettering them as an employee. Me, I didn’t get to write that off, because I am getting a degree and entering new career.

It always comes down to, what’s the narrative you create? I mentioned a case, Woody case. What had happened was this was an individual spent about $40,000 learning how to flip houses. They come to us and we explained the same thing.

It’s like, look, if you really want to capture that, you’re going to have to have a corporation. We need to set it up now because we need a business. It’s actually an expense. Otherwise, if it’s an S-corp, partnership, sole proprietor, you’re not in business until you actually buy your first property. You’re going to amortize all those expenses.

He didn’t believe us. He went to another accountant. The accountant tried to write it off. They got audited, they lost, and they ended up as a tax court case. You could actually look it up. It’s Woody v. Commissioner. You’ll see that the judge said, you’re not in business as an individual until you’re actually doing that business. The reason we say use a C-corp is because the day you set up that C-corp is the day it’s in business, and we want to grab those things.

Somebody says, “what if the business already exists” and you buy the business? Can you write off training since you’re new to this specific business? It’s not preparing you for a new business. If you’re in a business and then you decide, hey, I need training to better you in that business, you’re already in that business. The business is in existence. It already is in its profit mode. It’s not starting to go towards it.

If this was a brand new business, I’d say you might have a startup expense. We’re not going to be amortizing a lot. If it was training to learn to do something and then you decide to buy the business, you might lose it. Somebody says, “what if it’s a franchise you bought using an LLC?” You bought the franchise and you’re going through training. That’s bettering your skill as the employee of that business. You can write that off.

That’s always the trick. Is this making you a better employee for that business, or is it training for a new business? Let’s say that Eliot here has two choices. He goes and he takes an accounting class down at the university. We can write it off, easy. It’s making him a better employee. It’s bettering his skill. Same situation, except he goes to a culinary school and he starts learning how to make crepes.

Eliot: [Inaudible 00:38:12] people.

Toby: You’re going and you’re learning all these things. We can’t write that off. It doesn’t help him in his current business, he’s learning a new line of business. Does that make sense? It’s so much fun. See? Taxes. I’m telling you, exciting.

All right. “I recently purchased a small camper trailer to rent out, my camper rental side hustle, per se. Does this type of rental count as a short term rental as far as taxes are concerned? Some suggest filing Schedule C, while others say Schedule E might be more appropriate. We are not going to use this camper personally, it is for rentals.”

Eliot: That’s a big part there at the end that you’re not using it personally. I congratulate you on that. That makes it a lot easier. If you had too much personal use, that can change the answer on some of this. Toby and I were talking about this a little bit before the show, and this was probably personal property as a camper. Unless it had all the attributes of a home, a restroom, kitchen area, sleeping area, et cetera, then it’s more of a dwelling at that point.

Also, the short term rental factor, STR, if we’re really doing it as a short term rental as the tax code says, which is basically seven days or less average rent, then it would be a short term rental, and probably we would end up on Schedule C. But if it was a longer term than that and maybe a little bit longer rental going on, you probably would get it over to Schedule E, I would say.

Toby: Yeah, it gets a little wild. All right. The big question for me, whenever I see camper rental, is does it have a sleeping quarter? Does it have a kitchen? And does it have a bathroom ahead? If the answer is yes, it can qualify. If somebody does, then it is considered a second residence. You can write off the interest on any loans on it, you can write off the expenses associated with it. You can even depreciate that puppy. You’re going to get a pretty good size depreciation on this type of deal.

Again, it’s kind of weird. If you rent it for 14 days or less, you don’t have to report it. It’s covered under 280A subsection G2. If you rent it for more than 14 days, it is an investment property. I would say it’s going on Schedule E if you are renting it for less than seven days on average. You take all the days it was rented during the year, and you divide it by each unique rental.

It comes to less than seven days, seven days or less, then it depends on what other services you provided as to whether it went on E or C. That is whether you provide significant services similar to concierge services at a hotel. Am I feeding you? Am I taking you on tours? Am I doing things that would not normally be with a rental?

Are you doing it? Are you the material participant? If the answer is yes on those, then you’re probably going to Schedule C with self-employment tax. If the answer is no, then on this case, you’d be going on Schedule E. Isn’t that fun?

Eliot: Yeah. It’s really dicey. You got to really know the facts, very fact intensive.

Toby: It says, what if I do not own a different home I live in? I’m a renter. You rent the and then you rent it out. Same rules. What if the RV is run by a property manager? Then you’re probably passive, and it’s probably going on your Schedule C as a passive activity if it’s seven days or less. It’s going on Schedule E if it’s more than seven days and is considered a separate residence. It’s considered a second home. I hope that makes sense to you.

We like to break these things down and figure out, all right, what category are we falling in? So many people, they think rental and they immediately think, this is passive activity. Not always. Exclude from the definition of rental seven days or less. That is a pizza shop. It is the same thing as a pizza shop. If you’re doing the average rental is three days in an Airbnb, for example, you’re flipping pizzas. You’re not a renter. You’re not running a rental business, you are literally running an active trade or business.

If you want to make that into a rental business, then you do two things. Number one, you set up an entity to be the host. I saw another question in here that I think we’re going to answer later. The host usually is going to be an S-corp or a C-corp, and we’re going to rent the camper in this case on a monthly basis to the host, and the host is going to do the act of business.

In that case, now that renter is squarely an investment property. It’s rents, it’s passive, and then we look at the S-corp that is operating. It’s going to have income more than likely coming in. It’s going to pay the rent and it’s going to have that net. That’s the only income that could be subject to self-employment tax at that point. That still depends on whether you do the significant services. Otherwise, it could just be considered all passive.

Eliot: That’s why you’re seeing conflicting answers, Schedule C versus Schedule E, because there’s a lot of detail behind which is going to be placed on.

Toby: Yeah. Clear as mud, right guys? We have three rules. Some of you guys have heard this before. Three rules whenever we’re dealing with tax planning or financial planning. The first rule is always calculate. The second rule is always calculate. And the third rule is always calculate. You’re just trying to run the numbers. We just need to know these things. A lot of people say, how is this taxed? Patty gets an A plus. Patty had to deal with this for years, and I still think I’m funny sometimes.

Eliot: They do too.

Toby: They do?

Eliot: Yeah, you’re getting support there.

Toby: I got some. Nice job, Patty. They’re giving Patty the heart. Me, they’re giving slightly inappropriate.. Oh, my God. It was crying emojis crying. There are some hearts. All right,. Thank you, guys. I need some heart. I’ll take anything. You give Eliot some heart, because he’s apparently going to go on Valentine’s dinner and talk business.

Eliot: Read the tax code.

Toby: Not good. I don’t know. Unless it’s with another accountant, maybe. Speaking of a fun time, let’s watch Mr. Coons, Tax and Asset Protection event on the weekend, Saturday the 17th, another one on Saturday the 24th, and then we have the live event, which is fun.

Anybody been to the live events? Give me a thumbs up if you’ve been to a live event. Let’s see if there’s anybody. There’s a few. All right. Please come back. We miss you already. They’re always fun. We get to hang out. We get to go to an exotic location like whatever that lake is in Orlando. There’s an alligator in there. If you want to wrestle an alligator, I think you can.

Eliot: They’re in the tax code. It’s better than the tax code.

Toby: Speaking of, this is a freebie. If you were betting on the Super Bowl, you get to pay tax on your winnings. You do get to subtract off your losses, but you can’t take it as a loss. I was with the guy who happens to run a fund and they do sports betting. Wonderful guy.

I was like, hey, who do you care who wins? He was like, I don’t care, I don’t care. Eventually I was like, well, you’re betting on this, right? He was like, oh, a little bit. I was like, what’s a little bit like? Is it five figures? Six figures? It’s a little bit. I was like, okay, but it’s not my money.

What’s funny is, you know how they have those little Apple watches? I’m looking at his heart rate. I’m like, hey, what’s your heart rate? We’re getting towards the end and I was like, come on, you had Sam Fran, right? He goes, well, I do have Sam Fran with me.

I’m like, hey, what’s your pulse? 140. I think that’s high. I was like, how do you feel it? He’s like, oh, I’m okay, I’m okay. That’s why I cannot gamble in Vegas. I just don’t do it. My anxiety went up because I was watching him lose money. It’s like, oh, my goodness. Yeah, just don’t do it.

Do not gamble. I just can’t do it. I’m not good. A lot of people did. If you lost money, you can offset your winnings. 140, Natalia. I thought he was going to stroke out on my couch. He’s like, I’m fine, I’m fine. I’m like, okay, here’s three more beers.

Eliot: Because that’s healthy.

Toby: Yeah. Hey, I’m not going to drink them.

All right. “If I put my rental property into an LLC, do I have to file both personal taxes and business taxes?”

Eliot: All right. Whenever we get this question, we got to ask, how is that LLC taxed? It can be a sole proprietorship. It can be a partnership if we had another member, two or more members. It could be an S-corp, could be a C-corp. All those make a difference. If it’s a sole proprietorship, then it’s what we call disregard, which in IRS terminology just means you forget it. You just ignore the thing, it doesn’t exist.

It’s all going to come on to your 1040, and then we would have just your 1040 tax return, but it’s certainly going to have that activity on it. It’s not like we can just avoid the activity. That will go on what we call Schedule E, page one. If it’s a partnership, well then the partnership will file a return. We’re going to get a K-1 from the partnership that will go on to our 1040, so we have two tax returns there.

S-corp, likewise, but we wouldn’t put rentals in an S-corp. I really shouldn’t go there, but it would file its own return and give you a K-1 as well. A C-corp is a separate taxpayer, and it would file its own return. It would be unrelated to your 1040, but of course, you’d still have to file your own 1040. Never ever put appreciable real estate into your S or C-corporations. Perhaps, the one exception where we talked about maybe selling your primary residency to an S-corporation, that would probably be the one exception.

Toby: If you’re going to keep it, right? We don’t want to be in a situation where we have to refi out of an S-corp because it’s taxable to remove it. If you pass away and you have a step up in basis, you’re going to get a get out of jail free card, but you got to have a really good reason to own real estate inside of an S-corp.

If you’re a developer,  and I just had this with a client, bought a very large building, kept it for three years, and now it became so valuable as a hotel that they’re going to demo it and then rebuild. It’s like they’re going to sell that puppy. They already have somebody that they’re interested in. They’re like, hey, how do we not screw up our capital gains?

It’s like, okay, tear it down, sell it. Let a new S-corp that you own do the development in that way. At least we’re getting our long term capital gains over here. We don’t have to worry about the recapture because they’re destroying the building. There’s retiring all the asset on it, so they’re just selling land. That’s one of those things. Then we’re going to run those numbers and make sure it makes sense. It’s a lot of fun.

You laid it out really, really well. The only other thing I would say is that if you have that LLC, there is a reason we use an LLC in real estate and put it on page two of your Schedule E, and that’s for financing. If you have income that’s going on page one of your Schedule E, most mortgage companies are going to use 70% of that number. If it is going on page two of your Schedule E, they’re going to use 100% of that number.

There are guidelines depending on if it’s a federally backed mortgage. I think Freddie and Fannie do the 70%. You want to make sure that you’re cognizant of that. The other thing we see is if you are selling a property that’s commercial in nature or a large multifamily, make sure it’s a partnership and does its own return, because you could screw up underwriting for a purchaser if you don’t have that actual tax return. It messes them up.

They don’t want to be looking at page one of your Schedule E. They don’t want to be looking at your personal return. They want to see a return on that investment and the books on that investment. Just to throw that out there. By the way, anybody can set up a consult here if they want to talk to one of our advisors or professionals.

A lot of the times, that’s what we’re looking at. We’re trying to get as much information, because as you can tell, there’s three or four answers depending on the facts on a lot of these things. We’re just trying to make sure that we get the gist of what’s going on so that we can make sure that we’re helping you. In fact, it’s free. We’re not going to twist your arm or anything, but if you want to have your answers or your questions answered and get an actual diagram done for you, it’s my pleasure. It’s our pleasure to help you.

By the way, speaking of helping you, we have Jeff, Addie, Amanda, Jared, Dutch, Arash, Tanya, Ross, and Troy, all answering questions. They’ve answered almost 150 questions now. If you have a question, go into the Q&A and you can feel free to ask it. I see so many questions going in there, and they are just knocking them out. I just want to say, thank you guys, because you don’t get to act goofy online or in front of a camera.

They’re just busting through questions. They’re probably like, why are they making me answer all these questions? No, it’s actually kind of fun. It’s like brain twisters. What is the one where they’re always asking you questions on TV?

Eliot: I don’t have TV like that.

Toby: Come on. They have game shows where they’re asking you, what is it?

Eliot: Jeopardy. I know there are questions there.

Toby: What is jeopardy? All right, that was a good one.

“How often should I be meeting with my CPA a year?”

Eliot: This is, of course, it depends, but more activity. Probably, I’m going to really recommend having quarterly meetings with your CPA just to make sure everything’s on track. Maybe that 4th quarter could be part of tax planning for your end. We actually start tax planning in the first quarter. That could be your first quarter meeting. We’re tax planning, I guess, throughout all of them.

Even if by meeting number two or three in the quarter throughout the year, if it’s not much that needs to go over, well, then it’s probably worth it just to have us look at it. Have your CPA look at it and just say, hey, everything looks good. There’s value in that alone. The clients that I know that do take advantage of quarterly planning, there’s just a lot less confusion at the end that could possibly get in there. Things just seem to work a lot better more smoothly.

Toby: Yeah. If you’re trying to do planning, make sure your CPA does planning. We have a lot of preparers out there that don’t know how to project. They’re not actual planners. It’s specific software. It’s a specific skill set. Eliot here, for example, does the projections all day long. Do you do tax prep?

Eliot: No. Not anymore.

Toby: If you’re a planner, quite often, you live in one world, and then somebody who’s a preparer lives in the other. Your planner will oftentimes tell the preparer, here’s what I want you to do. We’re doing real estate professional status. We did a cost segregation on this. I ran this number, and I want to see this much put into a DB plan. I want to see this on a 401(k).

They’re actually instructing and telling the CPA. All too often, we go to a CPA at the end of the year. We got the little box, the shoe box full of receipts and you go, here you go. That’s not the best use of a CPA, just so you know. A lot of CPAs aren’t necessarily proficient on tax planning, just like not all lawyers.

I couldn’t go into a criminal courtroom and be proficient. There’s no way. You got to be in your lane. How often should he be meeting with the CPA? It’s going to depend on their skill set. Are they a planner? If they are, then it really depends on how big your company is. If you’re just getting started, it’s probably once a year.

You educate yourself a little bit, and you start looking for things. You have a conversation with that CPA and you say, is there anything we could do better? Maybe you touch the hot stove once a year, burn yourself a little bit and say, okay, next year I’m going to do this a little differently. But it’s not horribly painful. You don’t want to put your whole hand on there, where you’re making a bunch of money, and you find out that you could have been writing things off differently, or that you end up with unexpected tax consequence.

If you’re larger, you’re making over a hundred, 200,000 a year, or you have complexity, hey, I’ve got more than three or four properties, and I’m really involved, you probably want to be doing it on that quarterly basis. We spend a lot of time working with our clients, making sure that we get them into the right one.

The hardest part is finding enough people. CPAs, we’ve lost about 15% of the profession in the last few years. A lot of them are retiring, so it’s been difficult. We’re trying to do everything we can to continue to educate people so that you are not just sitting here at the mercy of somebody else’s knowledge who may never have taken a class on corporations, may know how to audit financials, maybe very great at doing consolidated financials, compilation reports and stuff but when you come and start talking tax strategy to them, they may or may not know what they’re doing. They may or may not tell you that they don’t know what they’re doing, which can be problematic  for you.

All right. “Can I file my taxes for my LLC as a corporation to get a lower tax percentage? I run short term rentals. I host short term rentals for other owners. I also run short term rentals in the properties I own. I have an S-corp with my husband and I work from home. My accountant said I cannot deduct my home office expenses. I know I can, but I don’t know how. Could you please explain the steps to do it?”

Eliot: Going back to the first part of the question, LLC as a corporation, as we just said, we never want to put appreciable real estate into a corporation, S or C, if we’re holding onto it for a long time. We might use that for flipping, so don’t get confused with that. But if we’re going to hold rentals and in this case, including short term rentals, no, it doesn’t make sense to put it in there.

What you could do is use your corporation maybe as a management corporation that doesn’t own the rentals, but it does provide some management services. You get some income into your C-corp, lots of reimbursements. If there was anything left over, yeah, it would be at a 21% flat rate if it is a C-corporation. You might have that going on.

With the S Corporation, though, that you already mentioned that you have, you could actually use the S-corporation as a management. But again, we wouldn’t recommend having the rentals there. Where are we going to do all this running of our businesses from? You certainly can’t have administrative office in your house.

Because we are talking about a corporation from the management standpoint, S or C, we have an accountable planner. You’re allowed to have an accountable plan. One of those reimbursements under an accountable plan is an administrative office. The only rule requirement is that you use that area exclusively for the business. We don’t use it for other things and that you do so on a regular basis. As long as you meet that, I’m not sure where your accountant is coming from that you can’t do it because you can.

Toby: A home office deduction is a term they use with sole proprietors. He’s probably saying, oh, no, you can’t do that. A lot of them think you have to rent your house to your corp, and that’s not the case. You’re reimbursing. It’s called an accountable plan, just like Eliot just spelled out. All you’re doing is reimbursing. the value of that property in the cost of that room.

You use a room methodology. You could use net square footage. You could use any reasonable methodology. You’re not stuck like when you’re doing a home office, and it’s usually quite a bit. Usually it’s 15%-25%, including if I have a cleaner come in, I have property taxes, my utilities, my insurance. It’s usually a larger number. In fact, it’s usually about 10 times the amount when you actually add things up.

Yes, you can absolutely do that. The question is, what is doing what activity? If I have that S-corp or C-corp, it is the host. If you’re doing it for other people, that’s where you run it. If you have your own properties, it’s going to be in an LLC that is either taxed as a partnership or disregarded to you, depending on how many you have and how it’s structured. At the end of the day, it’s going to end up on your 1040, and you might be renting it to your host depending on how active you are.

The reason we’re doing that is we want to make sure that if I’m renting it to the S-corp, it’s because I want it to be a long term rental. I’m going to group it with my other rental activities and I’m going to be a real estate professional, which I can use the time to qualify for, If I don’t qualify as a real estate professional, then I may just self-manage, put that thing in an LLC, and let it flow onto me.

Let’s say I do a cost seg and a bonus depreciation, I get a nice fat loss, short term rentals are 39-year property, we’re going to accelerate a big chunk, and we have to stretch the rest of it out over that 39 years, I could end up with a non passive ordinary loss that I could use to offset my W-2 income or other sources of income. It could be a very attractive strategy, especially for those of you that are in high income brackets.

Eliot: Yeah, lots of opportunity here and a great question.

Toby: Yeah, great question. Again, the answer is going to be it depends, but understand that it doesn’t take much for us to dissect and get to what your facts are to give you the right answer. Then say, if you were this, it could be this. If you’re this, it could be this. Eliot, I know he puts these little columns together. If you’re this or this, we give, usually, sometimes four different options.

You could say, if you’re willing to do this, this, and this, this is your result. If you’re willing to do this, this is your result. If you’re not willing to do anything, this is your result. Then you could decide, hey, I’m going to get an extra $10,000 this year if I jump through these hoops. Great, maybe it’s worth it for you.

Somebody says, do I have to get rid of my accountant? No, you can keep your account. Yes, we can do the planning services. We’re just going to tell them, here’s what we are doing. If you’re doing a cost seg study, it’s not us that’s doing it. We’re sending you to an affiliated firm that we like, that we’ve been using for years, that all they do is cost seg studies.

If we’re doing 45 L credits or in that particular case is a deduction, if we’re doing some of the other tax credits, then we’re sending them there. They’re looking at 179D and the 45L. 45L is tax credit, 179D is a deduction.

Anyway, we’re sending you to somebody to do those things, and then you can have your accountant do it. They’ll even do the tax forms for you saying, here’s what you would give to your accountant. Don’t replace a good accountant. If you have an accountant that you have a good relationship with, write them and tell them how lovely they are every month. Send them flowers even on Valentine’s day.

Eliot: And a copy of the tax code.

Toby: Yeah. Some chocolates, because we’re losing accountants. It’s hard to keep them. They may not have the expertise in a particular area, but keep your accountant. Accountants, we have them, but I don’t want to destroy a relationship that you don’t need to destroy. Sounds weird, I know.

Actually, if you have somebody that you’re good at working with, it’s hard right now to find somebody good to work with. Don’t burn that bridge simply because you have an alternative. Use us at our strength and use their strength. Do you guys agree with that? Give me a thumbs up if you agree with that.

You keep the existing relationships. There’s no need to punish an account if they haven’t been trained on things. Introduce them. Send them to my YouTube and say, hey, start picking this stuff up. We’ll work with them. If you’re a client here, we will get them on the phone with you. Our guys are very transparent.

As long as we can all agree, here’s the strategy we are going forward. You don’t have someone who’s just bonkers. They’re always going, you are fake news. If they’re not doing that to us, we’re good.

Al right. “Can someone file their taxes through your company?”

Eliot: Yes, you can. You have to be a tax client, and we do have lots of different ranges of options. We have an introductory you can get to learn, a package called Tax Saver Pro. Then we have a another package, which is just for tax preparation. Then we have a third package that is for tax preparation and tax consults, tax planning with people like myself and the other tax advisors. We have a lot of taxes that we do for our clients.

What Toby was saying on the last question, we just want a good fit. I can say this honestly after being here nine years, I’ve never been in a company that looks so much for a good fit with a, with a client. We certainly don’t want to interrupt any relationship you have with a good CPA that you trust, an EA, or anything like that. But always looking for that good fit for you.

Toby: We get too much business sometimes. We don’t want to bite off more than we can chew. We don’t like saying no to clients, but we have to. If you have a good accountant, then that way it alleviates some of that pressure. We say that just from a place of actual, genuine, what’s in your best interest? We’re a fiduciary. We got to do what’s in your best interest.

If we just took the business, yay. But man, we do over 10,000 returns a year. I’ll tell you, if we have a 10% of when somebody gets something in, it’s an avalanche. It’s a thousand hours of extra work and we’re like, oh, my gosh, I don’t have enough bodies to be able to throw out there. We have overflow firms out there that we have to use sometimes like, gosh, I need to be able to do this. I don’t want to take something on where we hurt you in any way.

From the advising standpoint, we’re very lethal. Yes, if you need to prepare, we can do it. We’re going to push on you a little bit to get it to us in the summer. We always do extensions unless there’s a really good reason not to, unless you have a loan or you have a refund, in which case then we’ll file them. Otherwise, we’re trying to give you as much time as humanly possible to make the decisions that are in your best interest as opposed to filing.

I work with one tax account or whomever is available. If you came in here, you’d be assigned to a tax advisor like Eliot, and you’d be working with them. Prep is done in teams, and it depends on who has the best availability and who’s the best fit. We do a complexity score on you to make sure that we match you with somebody who has the requisite skillset to handle it, and then we work as a team. You might have three people working on your file.

You won’t have to know about it. You might be dealing with one person or two people. But for the most part, we’re trying to get things done expeditiously, as quickly as possible. We don’t touch much that’s not complicated. It’s the joy of that.

Anyway, if you like learning this stuff, and you want your accountant to learn it, by all means, share. We are not greedy. We we want to just help people understand it. Tax and Asset Protection workshop, I already mentioned a couple of times. Feel free to sign up and have your account sign up. It’s absolutely free. As far as questions, send them in.

Eliot: We’re over 200 questions today by the team.

Toby: Two hundred questions? Jimmy Christmas. I know there’s still a bunch. There’s still 11. They answered over 200, and they got 11. Here, this is me tap dancing so that they can knock that it was 11 out. Don’t worry. If you have a question, after this, we will stop our presentation, stay on until they’ve answered your question. We’ll knock them out. We have enough people here to help you.

If you have questions the next two weeks, send them via taxtuesday@andersonadvisors. Eliot here goes through them. We answer the questions and then we pick questions. He likes to pick questions that represent a wide variety of things that we keep hearing. He likes to share them with me sometimes. He read them right before we started.

Eliot: He already knows all the answers.

Toby: No, it’s more fun that way. It’s like a surprise. My wife always says, it’s a pedido con sorpresa. She’s Colombian. I won’t translate that for you, but sometimes you get a surprise and it’s a special surprise. If you don’t know what I mean, maybe somebody gets it. I see one or two people maybe got that one. Yeah, they know what it is. If you’re a Latina or Latino, you might know what that is.

All right, we don’t want that. We don’t want what I just said. Visit us at Anderson Advisors. You could always come in there and see what’s new. We have a lot of articles that we’re constantly putting out, a lot of educational content. We always look at ourselves as an educational firm first.

If it’s appropriate for you to do the services, we’ll make sure that they work for you, too. We are somewhat unique in the way that we approach things. We really do look at four areas. We like the security through obscurity. We like to get your name off of things so people can’t see what you own and nobody needs to know what you own. We like to make sure that we have statutory protections that if somebody still decides to come after you, we have statutes that we back up.

We’re not relying on something that you didn’t pay a state to get protection on, because it’s like I want somebody else’s money and skin in the game. We look at business planning and make sure that you can continue to scale up depending on what you’re trying to accomplish.

The really important one for me is the estate planning. You’re creating generational wealth. We’re not just looking at this to be a one time thing and then let’s give a bunch of money to kids. Don’t do that. That’s usually a recipe for disaster.

There’s an old adage, first generation makes it, second generation holds it, third generation blows it. We want to make sure that we’re putting things in a vessel where they’re protected, even from well meaning future generations. We want it to keep running, running, running, and pushing out income to you. It’s not hard to do. It’s actually fairly easy.

We have a great investment service if you want help on knowing those concepts, it’s called infinityinvesting.com, absolutely free. You can go in there and learn that. The basic membership is free. There are two tiers that are paper, but we can make sure that you get the concepts down. It’s absolutely free.

You can always look at the book, Infinity Investing. It’s on YouTube. It was a gold medal winner and Amazon bestseller when it came out. Still rolling around there. No, I won’t give myself an applause. I’ll just say, hey, the joy and the reward is that people have success out of it. It works because it’s boring and it works. It’s simple, boring, and effective. That’s what we do. All right, guys, that is it for us. What are we going to do, anything else?

Eliot: No, that’s it. Thanks for joining.

Toby: Eliot and I are going to go bye-bye. We still have four open questions. We’ll make sure they get answered, and then we will be gone until two weeks from now. I just want to say thanks again for joining us for Tax Tuesday. We really appreciate you coming on and sharing the afternoon with us. It’s always a blast.